EU Wheat Closing Comments

EU wheat futures started 2010 in positive mood with January London wheat closing GBP1.30 higher at GBP107.80/tonne, and Paris January milling wheat ending EUR0.50 higher at EUR131.75/tonne.

Laggard seems to be the new buzzword in many of the newswires at the moment, and that certainly applies to wheat. What goes down must go up seems to be the popular theory doing the rounds.

And if the laggard needs any help going up then the funds will happily oblige. They've got a pot full of investment money burning a hole in their pockets, and have decided en-masse to buy the worst performing commodities of 2009. At least that's the theory.

Are they really that stupid? Only time will tell, they haven't been too much in evidence today that's for sure.

Certainly a severe cold snap across huge areas of the northern hemisphere may be causing some damage to winter wheat. It may also help provide a little boost in spot demand. Maybe that is what got the market moving into positive territory today, there's been no sign of "smart money" so far in 2010.

Russia keep winning the vast majority of any export tenders going, they also seem to have already fully allocated their intervention kitty.

The USDA peg the world stocks to usage ratio at 29.5%, its highest since 2001/02, and equivalent to more than 3 1/2 months supply. In the US the stocks to usage ratio is now its highest in at least the last twenty years.

It's hard to be overtly bullish, even with the funds.